C.1.1. February 24, 2016 G.R. No.

210542
ROSALINA CARODAN, Petitioner, vs.
CHINA BANKING CORPORATION, Respondent.

FACTS:
China Bank) instituted a Complaint for a sum of money against Barbara
Perez (Barbara), Rebecca Perez-Viloria (Rebecca), Rosalina Carodan (Rosalina)
and Madeline Carodan (Madeline). China Bank claimed that, Barbara and
Rebecca, for value received, executed and delivered Promissory Note No. TLS-
98/0076 to respondent bank under which they promised therein to jointly and
severally pay the amount of P2.8 million. China Bank further claimed that as
security for the payment of the loan, Barbara, Rebecca and Rosalina also executed
a Real Estate Mortgage over a property registered in the name of
Rosalina Respondent alleged that a Surety Agreement in favor of China Bank as
creditor was also executed by Barbara and Rebecca as principals and Rosalina and
her niece Madeline as sureties. Barbara and Rebecca failed to pay their loan
obligation despite repeated demands from China Bank. China Bank alleged that the
issue of whether Rosalina obtained material benefit from the loan was not material,
since she had voluntarily and willingly encumbered her property, Rosalina was
equally liable as principal debtor to pay the deficiency obligation in the sum of
P365,345.77

ISSUE:
Whether or not Rosalina is liable as an accommodation mortgagor.

RATIO DECIDENDI:
Yes. The Court finds that Rosalina is liable as an accommodation mortgagor
and also as a surety.
In Belo v. PNB, an accommodation mortgage is not necessarily void simply
because the accommodation mortgagor did not benefit from the same. The validity
of an accommodation mo1igage is allowed under Article 2085 of the New Civil
Code which provides that (t)hird persons who are not parties to the principal
obligation may secure the latter by pledging or mortgaging their own property. An
accommodation mortgagor, ordinarily, is not himself a recipient of the loan,
otherwise that would be contrary to his designation as such.
Art. 2047. By guaranty a person, called a guarantor, binds himself to the
creditor to fulfill the obligation of the principal debtor in case the latter should fail
to do so. If a person binds himself solidarily with the principal debtor, the
provisions of Section 4, Chapter 3, Title I of this Book shall be observed. In such
case the contract is called a suretyship.
 When Rosalina affixed her signature to the Real Estate Mortgage as
mortgagor and to the Surety Agreement as surety which covered the loan
transaction represented by the Promissory Note, she thereby bound herself to be
liable to China Bank in case the principal debtors, Barbara and Rebecca, failed to
pay. She consequently became liable to respondent bank for the payment of the
debt of Barbara and Rebecca when the latter two actually did not pay.